The Canadian dollar has strengthened further over the last week against both the Euro and the pound on the expectation that the price of oil will continue to rise, although it is a choppy ride. There are likely to be more big changes ahead for the Canadian dollar as well as the other commodity currencies as a result of the attempts to cut back oil production by the Organisation of Petroleum Exporting Countries (OPEC). The recent deal struck in Algeria just over two weeks ago to cut production by ½ million barrels per day in November represents major progress after years of stalemate.
The next OPEC meeting will be held at the end of November in Vienna at its headquarters and it is at this meeting where details will be finalised as to how much each of the 14 members will be able to pump. There appears to be some ambiguity over secondary sources and how much oil some countries are really pumping, something that has led to disputes in the past. This kind of clarity could become a problem once again and derail any agreement.
The other recent issue is that OPEC output was recorded at record highs earlier this week, despite the agreement made just two weeks ago to cut back.
The November OPEC meeting will be very important and could give new direction for the price of oil. Talks could also become frustrated especially when considering the history of the cartel. The will seems to be there though, and the Canadian dollar could see gains in the run up to the meeting if positive noises are being made which could present sellers with a good opportunity.
Any rise in the price of oil will of course feed into global producer prices which means inflation all over the world including Britain is very much around the corner. This could ultimately see times change in terms of monetary policy, something UK Prime Minister Theresa May has expressed she wishes to address.
Canadian Dollar sellers could benefit from the improvements in oil prices and coupled with Brexit, may find further support in the weeks ahead. Call our trading floor today on 01494 725 353 to discuss your contract options.
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